Last reviewed: 4/10/26· Reviewed by: David E.
The short answer: Contribute at least enough to earn your employer’s full match, then work toward saving about 15% of your gross income (including the match) for retirement. In 2026, the most an employee can contribute to a 401(k) is $24,500, with higher limits if you’re 50 or older.
That’s the headline. The right number for you depends on your age, how much you’ve already saved, and what your employer offers. This guide walks you through each decade so you can find a realistic target and a plan to reach it.
Step 1: Get the full employer match first
Before you think about percentages, check whether your employer matches contributions. A match is part of your compensation, and skipping it means leaving money on the table.
Matches vary, but a common formula is 50 cents on the dollar up to 6% of your pay. Here’s how that works on a $75,000 salary:
- You contribute 6%: $4,500 per year
- Your employer adds 50% of that: $2,250 per year
- Your total: $6,750, an immediate 50% return on the money you put in
If you contribute only 3%, you’d get only a $1,125 match, and you’d give up $1,125 of free money every year. Your plan documents (or your HR portal) will show the exact formula. Look for phrases like «up to X% of compensation.»
Rule #1: Never contribute less than the amount needed to get the full match.
2026 401(k) contribution limits
The IRS adjusts these limits periodically, so always confirm on IRS.gov. For 2026:
| Type of contribution | 2026 limit |
|---|---|
| Employee contribution (under 50) | $24,500 |
| Catch-up, age 50 and older | +$8,000 |
| Catch-up, ages 60 to 63 | +$11,250 (instead of $8,000) |
These limits apply to your own contributions. Your employer’s match does not count against your personal limit, though there is a separate overall cap on combined employee and employer contributions.
Most people won’t come close to the maximum, and that’s fine. The limit is a ceiling, not a target.
The rule-by-age guide
A widely used guideline is to save 10% to 15% of your income every year from your early career, and to push toward 15% or more as your income grows. The table below translates that into a target for each stage of life, along with a savings benchmark. The benchmarks come from Fidelity’s widely cited guidelines, which express your retirement savings as a multiple of your salary.
| Age | Suggested contribution (incl. employer match) | Savings benchmark (multiple of salary) | Main priority |
|---|---|---|---|
| 20s | 10% to 15% | 1x by age 30 | Start now, capture the match, build the habit |
| 30s | 15% | 2x by 35, 3x by 40 | Raise your rate with every raise |
| 40s | 15% to 20% | 4x by 45, 6x by 50 | Close any gap, reduce expenses that block saving |
| 50s | 20% or more, plus catch-up | 7x by 55, 8x by 60 | Use catch-up contributions, plan your timeline |
| 60s | Maximize while you can | 10x by 67 | Fine-tune your retirement date and income plan |
These are guideposts, not guarantees. If you’re behind, don’t give up: the sections below show how to catch up.
In your 20s: aim for 10% to 15%
Time is your biggest advantage. Money invested at 25 has roughly 40 years to grow. Even small amounts matter.
If 10% feels like too much on an entry-level salary, start at whatever gets you the full match and raise your contribution by 1% every six months or every time you get a raise. Many plans offer automatic escalation to do this for you.
Also keep in mind that early contributions often matter more than later ones. A smaller percentage started at 22 can outperform a bigger percentage started at 35.
In your 30s: aim for 15%
Your income is probably rising, but so are your expenses: housing, childcare, student loans. This is the decade where many people stall at 5% or 6% and stay there for years.
The fix is to commit that at least half of every raise goes to your 401(k) until you hit 15%. You won’t miss money you never got used to spending.
By 30, a common benchmark is having about one year of salary saved. If you’re below that, increase your rate rather than panic.
In your 40s: aim for 15% to 20%
Your 40s are often your highest-earning years and your last long runway before retirement. If you started late or have a gap, this is the decade to close it.
- If you’re behind the benchmark (about 3x salary by 40), aim for 18% to 20%.
- Redirect money from finished obligations, like a paid-off car loan, directly into your 401(k).
- Review your investment mix to make sure your savings are actually working for your timeline.
In your 50s: 20% or more, plus catch-up contributions
At 50, the IRS lets you contribute extra through catch-up contributions. In 2026 that’s an additional $8,000, or $11,250 if you’re 60 to 63, on top of the $24,500 base limit.
Starting in 2026, higher earners (a prior-year Social Security wages threshold of roughly $150,000, which is adjusted periodically) generally must make catch-up contributions as Roth contributions. Check how your plan applies this rule.
If you’re 50 and behind, maximizing contributions can make a major difference in 10 to 15 years.
In your 60s: maximize and plan the transition
If you’re still working, keep contributing, especially if you can take advantage of the 60-to-63 catch-up. This is also the time to think about when to claim Social Security and how you’ll draw down your accounts. Contribution rate matters less than having a clear plan for the next 30 years of income.
What if I can’t afford 15% right now?
Most people can’t jump straight to 15%. That’s normal. Try this approach:
- Start with the match. This is your non-negotiable minimum.
- Add 1% per year (or per raise). It’s painless and adds up.
- Use automatic escalation if your plan offers it.
- Capture windfalls. Put part of every bonus or tax refund into your 401(k).
A person who starts at 5% and raises 1% each year reaches 15% in 10 years, without a single dramatic budget change.
A worked example: what 10% looks like over time
Meet Sam, 30, who earns $60,000 and contributes 10% ($6,000 per year). Sam’s employer matches 50% up to 6% of pay, adding $1,800 per year, so $7,800 goes into the account each year.
If Sam keeps this up for 35 years and the account earns an average of 7% per year (a hypothetical return, not a promise), the balance at 65 would be roughly $1.08 million, even without any raises. In practice, salary increases would push that number higher, but returns also vary from year to year and could be lower.
This is only an illustration. Your results will depend on your investments, fees, and market conditions. To model your own numbers, use a 401(k) calculator with your age, salary, and contribution rate.
Traditional or Roth 401(k)?
If your plan offers both, the choice affects when you pay taxes, not how much you can contribute.
- Traditional 401(k): contributions reduce your taxable income today; you pay taxes on withdrawals in retirement.
- Roth 401(k): you contribute after-tax money; qualified withdrawals in retirement are tax-free.
A rough rule of thumb: if you expect your tax rate to be higher in retirement than now (common for younger workers), Roth can make sense. If you expect it to be lower, traditional may be better. Many people split contributions between both to diversify their tax situation.
Common mistakes to avoid
- Missing the match. The most expensive and most common mistake.
- Not increasing contributions over time. Setting 3% at 25 and never touching it again.
- Cashing out when you change jobs. You’ll owe taxes and usually a 10% early withdrawal penalty if you’re under 59½.
- Ignoring your investments. Contributing to a plan whose default fund is a low-yield cash option may leave growth on the table.
- Waiting for the «right time.» The best time to raise your contribution is when you get your next paycheck.
Frequently asked questions
Is 10% enough for a 401(k)?
For many people starting in their 20s, 10% (including the match) can be a reasonable base, especially if you increase it with raises. If you start later, you’ll likely need 15% to 20% or more.
What percentage of my paycheck should go to my 401(k) if I’m 40?
Aim for 15% to 20%. If you’ve saved less than about three times your salary, lean toward the higher end.
Should I max out my 401(k)?
Only if it fits your budget and you’ve covered the basics: an emergency fund, high-interest debt, and the full employer match. If you can max it out, great, but it isn’t required to retire comfortably.
Does the employer match count toward the 15% rule?
Yes. Most guidelines count your contribution plus your employer’s match toward the 15% target.
Can I change my 401(k) contribution anytime?
Most plans let you change your contribution percentage at any time or at least several times a year. Check with your plan administrator.
The bottom line
- Get the full match first.
- Aim for about 15% of gross income (including the match), adjusting for your age and how much you’ve already saved.
- Raise your contribution by 1% regularly until you get there.
- Use catch-up contributions if you’re 50 or older.
The most important step is to start, and then to increase your rate as your income grows. If you want to see how your contribution could grow, try our 401(k) calculator.
Disclaimer: This article is for educational purposes only and is not personalized financial, tax, or legal advice. Contribution limits and tax rules change; verify current figures with the IRS and your plan administrator.
Sources to cite and link: IRS announcement of 2026 retirement plan limits (IRS.gov) · Fidelity retirement savings guidelines · your plan’s Summary Plan Description.